Shopping Centers Today

AUG 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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6 S C T / A U G U S T 2 0 1 8 T H E C O M M O N A R E A N E W S F R O M A LL C O R N E R S O F T H E I N D U S T R Y INVESTORS HAVE AN APPETITE FOR RESTAURANTS 8 THE LATEST OMNI-CHANNEL INNOVATIONS 10 RETAIL RENTS ARE UP — AND A HAWK IS TOO 12 THE CONTAINER STORE UNWRAPS A NEW LOOK 14 E-fairness victory shifts focus to states T he Supreme Court's June 21 South Dakota v. Wayfair, Inc., ruling that the states can require most online retailers to collect and remit sales taxes marks the end of a long battle — but not the end of the campaign. Now the effort enters a new phase as ICSC works with the states to push updated sales-tax-collection policies, says Jennifer Platt, ICSC's vice president of federal operations and the head of the Marketplace Fairness Coalition. ICSC and other organizations have advocated for years to have phys- ical and online merchants treated equally where taxation is concerned, supporting legislation in Congress (most recently, H.R. 2193, the Remote Transactions Parity Act; and S. 976, the Marketplace Fairness Act), but Congress failed to move forward with these measures. ICSC and its allies also threw their support behind the South Dakota case, along with 41 states, the latter arguing that they were losing billions in uncollected sales-tax revenues. The ball is now in the states' courts to establish any provisions that would, for instance, exempt small retailers from the expense of managing such tax filings throughout every state, says Herb Tyson, ICSC's vice president of state and local government relations. ICSC is advocating for states to follow the South Dakota blueprint that draws the line at 200 separate transactions or $100,000 in in-state sales, Tyson says. Roughly 20 states already have an economic-nexus model in place that, under the 1992 Supreme Court ruling Quill Corp. v. North Dakota, has only allowed them to require online retail- ers with a physical presence in a state — a store or warehouse, for instance — to collect and remit taxes. In April Oklahoma enacted a law requiring online sellers to collect sales-and- use taxes on goods purchased and to give notice to consumers that such a tax is due. The law applies to aggre- gate sales in excess of $100,000 and is set to take effect on June 1, 2019. The Georgia Legislature approved a bill requiring online retailers that make either $250,000 in sales or complete 200 transactions to begin charging sales tax on goods. Kentucky addressed e-fairness in its latest tax-reform package, stipulating that if the Supreme Court overturned its earlier decision, the state could immediately require the collection of such sales-and-use taxes. "States that aren't in the process of doing this probably have to do a little bit of tinkering to figure this out," said Tyson. "We will be aggressively encouraging each and every state to get their ducks in a row and charge sales tax where due." Before the ruling, states were pas- sively relying on online customers to pay such taxes voluntarily, though few did, and many online sellers openly and deliberately promoted that loop- hole, which made their goods about 3 percent to 10 percent cheaper, depend- ing on state tax rates. South Dakota estimates that it is losing some $58 million each year in tax revenue from sales by out-of-state businesses that do not collect sales tax. Since South Dakota has no state income tax, sales-tax revenue consti- tutes roughly 60 percent of its annual funding for roads, schools, bridges, police and the like. The additional revenue will prove to be timely for hundreds of strapped communities. When Quill was issued in 1992, online sales accounted for less than $400 million annually. In 2019 U.S. ecommerce is expected to approach $500 billion. Questions do remain about the ICSC will help push for online state sales-tax laws By Steve McLinden

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